ITT's Space Systems Division soars

Next week, a remote sensing satellite is scheduled to be launched into space from Vandenberg Air Force Base in California. Once deployed, the system will supply multispectral images of the Earth from almost 500 miles above the planet.

Known as the eyes of the satellite, it provides high-resolution imagery for military, intelligence, foreign policy, homeland security and civil applications. The payload includes the electro-optical assembly (camera and telescope), electronics, the power supply unit and high-speed digital processors.

Space Systems has 1,650 local workers, up by 88, or nearly 6 percent, from last year. It ranked fourth on the Rochester Business Journal's most recent list of manufacturers. Space Systems has a history of sending imaging equipment into orbit-and to the moon.

Its products are used in intelligence, surveillance and reconnaissance systems; global positioning system navigation; meteorological imagers and sounders; commercial remote sensing systems; space science systems and other applications.

ITT, an $11.7 billion global engineering and manufacturing company based in White Plains, acquired Eastman Kodak Co.'s commercial and government systems group's remote sensing systems division in August 2004 for $725 million in cash. The acquisition was a bid to grow ITT's aerospace business.

The Space Systems Division is part of ITT's defense, electronics and services group and serves customers in the Department of Defense as well as the intelligence, space science and commercial aerospace industries. In the second quarter, the segment logged revenue was $1.6 billion, roughly flat compared with last year. Operating income edged upward to $201 million from $199 million.

The division employs a total of 2,530 people at sites in Rochester and in Fort Wayne, Ind.; Clifton, N.J.; Boulder, Colo.; and Washington, D.C.

Chris Young, Space Systems president for the past three years, said ITT's acquisition of the Kodak division created a space footprint that was large enough to be a major force in the market.

The firm is focusing on new growth areas but also trying to expand existing markets. A desire to move the business beyond space may lead to a name change for the division, Young said.

Before moving into his current position, Young served for two years as vice president and director of the division's commercial and space sciences business in Fort Wayne.

Young has spent his career with ITT, initially joining the company's Aerospace Communications Division in 1982. After serving in a series of managerial and project engineering positions, he was named director of space engineering for the division in 2001, responsible for all space engineering activities including process quality and process improvements.

Young sat down with the Rochester Business Journal last week to talk about Space Systems in his first in-depth interview since taking over the division. An edited transcript follows.

Growth here

ROCHESTER BUSINESS JOURNAL: The growth you have talked about has led to more jobs as well. What types of workers are you hiring?

CHRIS YOUNG: Last year, we added about 100 workers from the beginning of the year to right now. Most jobs are engineering to a large extent, electrical and mechanical engineers across the board, and nice, high-paying jobs. So it's been pretty good for us.

We are hiring now but making sure they are strategic hires. We also look to universities, hire a steady flow of new students. This is a great area for talent, especially in our core competencies. RIT has a great curriculum for image scientists. UR has a great optics department, which is key to us.

RBJ: Space Systems is a major local employer, yet little is known in the community about the business. What do you do here?

YOUNG: ITT Space Systems Division, or SSD, makes a number of products, actually, that you might use every day. In the Clifton, N.J., area, we are involved in every GPS payload, so every time you turn on your navigation in your car, you're using ITT payload that we've been making since the inception of the program.

We are very proud of having over 100 years (cumulatively) of GPS with over 100 years orbit success without failure, so that's a great thing. So that's one product.

If you watch your nightly news and check out the weather forecast, the satellite image you see is also taken by a camera, done mostly at our Fort Wayne facility. The pictures you see of Hubble, we're doing the next generation of that. We have worked on the James Webb Space Telescope, (which provides images of the universe's first stars and galaxies). When you look at Google Earth, images there were taken by a satellite camera made in Rochester, called NextView, and we're just about ready to do the next generation of that and bid on that next generation.

Other products we can't talk about; they are classified imaging products. About half of our business is classified-not only military, just classified. We do some things for the Air Force. A new program is looking at new (intelligence, surveillance, and reconnaissance) products for airborne, so we're not just space, and at some point in the future we may have to change the name from Space Systems Division because we're really more kind of an imaging product base.

While most of what we've talked about is hardware, because it's cool, we do also a lot of software and image-processing capability, which is a legacy here in Rochester, as well as in Washington. So we do a lot of exploitation of imagery for the government and for commercial (customers).

The recession

RBJ: How have your core markets been affected by the worldwide recession?

YOUNG: The good news is actually we're having a great year and our outlook is about a 7 percent year-on-year growth over time. And that's kind of cool, since not everyone in the country can say that right now.

I'd attribute it to what we do is very fundamental to what the government needs. Are we really not going to have a satellite that takes weather pictures? Are we really going to stop doing GPS? The answers are no. Those are fundamental, strategic-type programs that will be there for a very long period of time.

I think the other part of it in our growth areas is the need for the U.S. military and the government as a whole-whether that be the Air Force, the Army, the Navy, Marines, whoever-they all need to see things. They are all interested in intelligence, and imagery is a part of that, and that's right square in our breadbasket. We're looking at that market that at a minimum is flat, and on the upside it's actually growing.

RBJ: So you're recession-proof?

YOUNG: Never say never. There are aspects of business that have been affected by it. A startup called ANGEL (Airborne Natural Gas Emission Lidar), it was a business concept to look at natural gas pipelines, which has been greatly affected by the recession. But it's a very small portion of our business.

We have a shrink-wrapped software division in Boulder, and that actually has been surprisingly robust. They sell shrink-wrapped software that exploits spectral data. How's that for a mouthful? But it's been very robust, and we're pleased with that.

RBJ: What are your plans for growth? Are you looking to expand internationally?

YOUNG: We actually do a bit of work in the international market. (We) just won a job with the Japanese government, which is a weather satellite payload, virtually a copy of the one we sell to NASA.

We've done that in the past, working with Japan and South Korea. We are looking to take some NextView capabilities and sell them overseas. It's unclear yet whether we can do that because of (International Traffic in Arms Regulations), but we're working through that.

We're looking at using Google Earth as commercial imagery and the airborne market, which is relatively new to us. We have been mono-customer and into that box of space (mainly products for space, with the same customer base), so what we've tried to do is look at it from a bigger standpoint. What are our strengths? And image processing and our image science work is part of that, so why not do more of that?

RBJ: You became the division president in 2006. Talk a little about your background and what changes, if any, have been made to the business since you took the helm.

YOUNG: I've been at ITT for 27 years. I'm an electrical engineer by trade. I went to Ohio State and was hired directly out of college and spent most of my career in Fort Wayne.

One of our big pushes when I came here is creating a pipeline of new business, rather than having the cycle of big hiring times, then big layoffs, which doesn't give you a stable work force. We need to look to the future and measure where we are so we have a nice, steady growth, and that's what we're really pushing for. Sustainability of that growth over time is important to us-small, steady growth in that 7 percent growth range.

We are looking at new customers. Being mono-customer is not always a good thing. It's not good for that customer, not good for your employee base, not good for the community you live in, so we're trying to broaden our base.

That's why I said earlier we'll have to think about changing our name, because space will always be there, we're never going to leave that. We have a great core competency we can share there and a great customer base, but that's a mono-community, right? ... And yet we have a lot of things to offer a lot of other communities.

Staying here

RBJ: What about the division's commitment to Rochester? What are the benefits of being here?

YOUNG: The educational infrastructure is phenomenal here. Rochester has a lot to offer. We have found in almost all our areas (that) we're not on East or West Coast, and people want to go there, and we're not near a center of government, per se. But what we find is that as we're recruiting, we find people who are five years out (of school) that have some sort of tie back to the area want to come back and have a family and be able to afford a home. It's the lifestyle. So I think that fits right into Rochester, and it's a great recruiting tool.

RBJ: How about the challenges of doing business here?

YOUNG: You have to take it into context. From our perspective, there are some monuments here, right?

There are some world-class facilities we have here in Rochester that just can't be moved and can't be replicated anywhere. They're one-of-a-kind type facilities. So whether there are disadvantages, they're not relevant. It is what it is, and that's the way it's going to be. We're here in Rochester to stay, and we're glad to be here.